Friend v. HA Friend and Company

• Citation: 416 F.2d 526
• Decision Date: 03 November 1969
• Docket Number: No. 22489,22489
• Parties: Wilber H. FRIEND, an individual, and Friend Company, a corporation, Appellants, v. H. A. FRIEND AND COMPANY, Inc., Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

416 F.2d 526 (1969)

Wilber H. FRIEND, an individual, and Friend Company, a corporation, Appellants, v. H. A. FRIEND AND COMPANY, Inc., Appellee.

Nos. 22489, 22489A.

United States Court of Appeals Ninth Circuit.

September 12, 1969.

Rehearing Denied November 3, 1969.

COPYRIGHT MATERIAL OMITTED

D. Gordon Angus (argued), and Robert M. Angus of Angus & Mon, Pasadena, Cal., for appellants.

John C. Brezina (argued), Joe C. Young and Roger H. Bruny, of Alberts, Brezina & Lund, Chicago, Ill., Harris, Kiech, Russell & Kern, Charles E. Wills, Los Angeles, Cal., for appellee.

Before BARNES and CARTER, Circuit Judges, and THOMPSON, District Judge.^*

BARNES, Circuit Judge:

The first of the two cases brought by appellee and combined here on appeal, seeking redress for alleged unfair competition and trade-mark infringement, was initiated in the United States District Court for the Central District of California on June 17, 1964. Jurisdiction was based upon the Federal Trade-Mark Act of 1946, the Lanham Act, 15 U.S.C. § 1121 and upon 28 U.S.C. § 1338. Diversity jurisdiction, 28 U.S.C. § 1332, was also alleged. On March 16, 1966, while that case was still pending, plaintiff appellee filed the second suit here appealed, charging appellant with misrepresentation and false advertising. Lanham Act and diversity jurisdiction were invoked. Jurisdiction in this court for the combined appeal and cross-appeal is based upon 15 U.S.C. § 1121.

Appellee H. A. Friend & Co., Inc., an Illinois corporation (hereinafter H. A. Friend) traces its origin as a retail paper operation specializing in printed and engraved legal stationery to 1908. H. A. Friend is a family corporation currently operated by the three youngest sons of its namesake and founder, now deceased. Until 1948, the oldest of the Friend sons, Wilber, the co-appellant¹ here, was an active partner, having become a full time employee of the firm in about 1930. Appellant left H. A. Friend as the result of a family dispute; Wilber's capital interest in the company was purchased by his father, and a new partnership with the same name was formed by the father and the remaining three sons. This partnership was incorporated in 1961.

The district court found that appellant told his father and brothers that he was leaving Illinois for Pasadena, California, where he planned to engage in the wholesale paper business under the name of Friend Paper Company (hereinafter Friend Paper). Friend Paper had been organized, but not incorporated, by H. A. Friend in the 1930's as a means of obtaining paper from H. A. Friend's suppliers at wholesale prices. Appellant ran Friend Paper from his office at H. A. Friend, using H. A. Friend's personnel. When appellant left H. A. Friend, the name of the wholesale operation was changed to Friend Paper Products Co.

Appellant did move to Pasadena. This action appears to be the one truthful aspect of the future plans he had outlined to his family. Appellant's business, which he titled Friend and Company (hereinafter Friend), did the same type of retail business as H. A. Friend.

This similarity in the names of the two companies was exploited vigorously by appellant. In 1955, appellant distributed a catalogue of Friend's products which described the Pasadena operation as the "Western Division" of Friend and Company. An asterisk appearing at the location of H. A. Friend in Illinois purported to locate the "General Offices" and the Western states on the map were shaded, a caption indicating they were "served from the Western Division, Pasadena, California." The catalogue was labeled "No. 47." 1908 plus 47 equals 1955, the year of publication. When a second catalogue appeared in 1964, it was titled "No. 56."

The catalogue's text described Friend as a company in business since 1908 and Wilber as manager of the Western Division since 1949. The district court found that "Barrister Bond," "Friends Bond," and "Banner Bond" were trade-marks and watermarks used by H. A. Friend long before 1948. Appellant's catalogue listed stationery under these names. The 1964 catalogue contained the same information. Between 1951 and 1953, appellant mailed letters to Western law firms announcing the opening of a "Western Division" which could save freight costs from the "East." Appellant's misrepresentation was not limited to indirection; one customer of H. A. Friend, for example, was informed that Friend would "get your die from our Zion plant."

The district court, characterizing appellant's conduct as "fraudulent" and appellant's testimony as "simply unbelievable," enjoined appellant's use of "Friend" as a trade name or trade-mark, except under limited circumstances, as well as appellant's insinuating any connection with H. A. Friend. Appellant was prohibited from using the trade-marks "Banner," "Barrister Bond," "Bar Bonds" and "Friends." Appellant was also forbidden to misrepresent the cotton fibre content of his products. Damages for appellant were found in the following amounts: 1. for acts of unfair competition and trade-mark violation, $15,000; 2. for false description of merchandise, $20,000; 3. for attorneys' fees, $30,000.

Appellant challenges this judgment in its entirety and appellee cross-appeals, alleging the district court erred both in not awarding appellee appellant's profits stemming from unfair trade practices and in failing to enjoin completely appellant's use of the word "Friend" in the retail paper trade.

We first consider appellant's twenty-one assignments of error. For convenience, we group them under five main headings.

We evaluate initially appellant's contention that appellant, not H. A. Friend, owned Friend Paper when it was doing business as a wholesaler in Illinois prior to 1948. Appellant argues that there is no "substantial evidence" to support the trial court's finding that H. A. Friend organized Friend Paper and points to his own testimony that he owned and operated Friend Paper for personal profit as unrefuted evidence negating the trial court's conclusion. Appellant's inference must be that if he, not H. A. Friend, owned Friend Paper, appellant somehow acquired trade name rights in "Friend."

In order for us to reverse the trial court's finding on this point, it is necessary for appellant to demonstrate that the finding is "clearly erroneous." Fed. R.Civ.P. 52(a). Paul Sachs Originals Co. v. Sachs, 325 F.2d 212, 214 (9th Cir. 1963). As the Supreme Court stated in Commissioner of Internal Revenue v. Duberstein, 363 U.S. 278, 291, 80 S.Ct. 1190, 1200, 4 L.Ed.2d 1218 (1960), "`A finding is "clearly erroneous" when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.' United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746." See Fleischer v. Commissioner of Internal Revenue, 403 F.2d 403, 406 (2d Cir. 1968); Waltham v. Netoco Theatres, Inc. v. Commissioner of Internal Revenue, 401 F.2d 333, 335 (1st Cir. 1968); Tennessee Foundry & Mach. Co. v. Commissioner of Internal Revenue, 399 F.2d 156, 157 (6th Cir. 1968). Appellant has failed to sustain this burden of proof. Against appellant's testimony we weigh, and find convincing, under the Duberstein standard, the evidence produced by appellee. For example, William Friend, appellee's corporate secretary and a partner in H. A. Friend in 1946-1949, testified that Friend Paper was "just a front" for buying paper for H. A. Friend and was not supposed to make a profit. C.T. at 529. The witness also testified that until the accounting at the time of the dissolution of the partnership in 1948, appellant was not known by his partners to be making a personal profit from Friend Paper. C.T. at 538. This testimony, coupled with the partnership agreement of 1941, which bound all partners to devote full time to the partnership business and prohibited activity detrimental to the partnership business, convinces us the district court did not err in its conclusion. Our judgment is reenforced by the fact that the crucial evidence here hinges on the credibility of the witnesses. "It is settled law, * * *, that the question of credibility is peculiarly for the trier of fact. An appellate tribunal will not redetermine the credibility of witnesses where, as here, the trial judge had the opportunity to observe their demeanor and to form a conclusion." Dresser Industries, Inc. v. Heraeus Engelhard Vacuum, Inc., 395 F.2d 457, 463 (3d Cir. 1968). See Graver Tank & Mfg. Co. v. Linde Air Products Co., 336 U.S. 271, 274-275, 69 S.Ct. 535, 93 L.Ed. 672 (1949).

Appellant's next two groups of assignments focus on injunctive relief awarded by the district court. Our discussion of these points is related to and dependent on our conclusion reached on appellant's laches argument, infra.

Under a caption of "unfair competition," the district court enjoined appellant from the use of the word "Friend" either as a trade name or in advertising, except in conjunction with certain disclaimers, and prohibited appellant from claiming affiliation with H. A. Friend. Appellant challenges this ruling, contending both that H. A. Friend abandoned the name and that appellant has a right to use his own name.

Appellant's first argument can perhaps most charitably be described as a misstatement of the facts. The district court found what our reading of the record reveals, that appellees consented to appellant's use of the name Friend Paper Co. in the wholesale paper business. That use is not proscribed by the appealed order. It is reasoning that smacks of duplicity for appellant to argue that appellee's permission to use the name in a noncompetitive field constitutes an abandonment of its right to use the name of its firm in a competitive field. We summarily reject appellant's position.

Appellant's second point has more merit: the law is reluctant to preclude an individual's business use of his own name...